The 63-year-old was born in Ethiopia and came to the Netherlands as an asylum seeker in 1990. He pleaded not guilty on Monday, stating that the prosecutors are accusing the wrong man.
An Ethiopian court sentenced the defendant to death, in absentia, in 2007 for his role in what was called the "red terror", which the communist military junta of Mengistu conducted after the ousting of the Ethiopian emperor, Haile Selassie, in 1974, the national prosecutor's office said in a statement.
The Ethiopian sentence, however, cannot be carried out in the Netherlands because it does not accept the death penalty, making a new trial the best option to hold him to account, prosecutors said.
The trial, which is based on an investigation by the International Crimes Team of the Dutch national police, is being heard at a Dutch domestic court in The Hague, rather than one of the international tribunals that sit in the city.
The court will this week question the defendant, who has been held in custody in the Netherlands since 2015, and will hear statements from victims - Ethiopians living abroad.
It is not yet known when the court will reach a verdict.
Mengistu was found guilty in absentia of genocide in the same trial in Ethiopia in 2007 after he and top members of his military government were accused of killing thousands during his 17-year rule.
Mengistu was ousted in 1991 and fled to Zimbabwe, where he still lives.
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